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U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

reuters.com

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Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#61

Post by JumpCrisscross »

sudden_dystopia wrote: post #33
jeffbee wrote: post #19

Earlier quoted context omitted.

The market does not work that way. You're implying that the cause and effect are backwards. It is local wages that set the price! The prices, while they do adjust slowly due to high friction in the housing market, are not exogenous.

The 500% difference in housing prices. You are leaving out numerous factors including demand, supply, and local regulations.

> 500% difference in housing prices

Curiously, 20% down implies 5x leverage. Not saying that's what's causing the difference. But in the weird way leveraged finance works, a <100% income difference can absolutely fuel a 5x asset price gap.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#62

Post by foobarian »

kube-system wrote: post #43
adamredwoods wrote: post #20

I have been wanting to ladder up to a bigger house for a few years now. For a US$1M house, which is the going rate near my area, the jump from 6% to 7% is $5000/month apr interest to $5834/month apr (not including fees, taxes, and insurance). So to go back to the monthly of $5000 (which is out of my budget), a US$1M house would need to fall to $857,153. That is NOT happening around here. I have no idea who is buying…

> I have no idea who is buying houses at these prices Only the most richest parts of the US have homes that start at $1m. And only a fraction of the people rich enough to live there can afford to purchase.

A lot of the time these are not bootstrapped buyers, but families with help from parents/inheritances etc. That's what you're up against.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#63

Post by [deleted] »

adamredwoods wrote: post #20

I have been wanting to ladder up to a bigger house for a few years now. For a US$1M house, which is the going rate near my area, the jump from 6% to 7% is $5000/month apr interest to $5834/month apr (not including fees, taxes, and insurance). So to go back to the monthly of $5000 (which is out of my budget), a US$1M house would need to fall to $857,153. That is NOT happening around here. I have no idea who is buying…

[deleted]

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#64

Post by evancox100 »

conbandit wrote: post #49
adamredwoods wrote: post #20

I have been wanting to ladder up to a bigger house for a few years now. For a US$1M house, which is the going rate near my area, the jump from 6% to 7% is $5000/month apr interest to $5834/month apr (not including fees, taxes, and insurance). So to go back to the monthly of $5000 (which is out of my budget), a US$1M house would need to fall to $857,153. That is NOT happening around here. I have no idea who is buying…

Minor correction, but you probably mean Blackrock-type firms. Blackwater was a private military company.

Correction to the minor correction, Blackrock, the asset manager/ETF provider, does not engage in institutional purchasing of SFH homes. For a little while BlackStone, the Private Equity firm, had an ownership interest in company that did this, but I’m not sure they still do.

https://www.blackrock.com/us/individual/insights/buying-hous...

Edited to change “ownership” to “purchasing”

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#65

Post by dehrmann »

hollywood_court wrote: post #30

This is great news for cash buyers like my wife and I. We’ve been wanting to get out of our town for a while and move to a neighboring town. The housing prices are delusional around here. Hopefully this will bring some sellers back down to reality.

> The housing prices are delusional around here.

We had stupid cheap money with low interest rates and an increased demand for space for lockdowns and WFH. Of course prices went way up. The prices weren't delusional; they reflected market realities.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#66

Post by 1980phipsi »

adamredwoods wrote: post #20

I have been wanting to ladder up to a bigger house for a few years now. For a US$1M house, which is the going rate near my area, the jump from 6% to 7% is $5000/month apr interest to $5834/month apr (not including fees, taxes, and insurance). So to go back to the monthly of $5000 (which is out of my budget), a US$1M house would need to fall to $857,153. That is NOT happening around here. I have no idea who is buying…

"That is NOT happening around here." Yet

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#67

Post by onlyrealcuzzo »

endisneigh wrote: post #23

people who can buy a house all cash will be the real winners here. if and when rates go down, they can cash out refinance, and if they don't they will benefit from the downward pressure high rates create on prices. it's rich to be rich.

I mean, sure, but if rates stay this high for even a year and half - prices are likely to drop substantially.

In that scenario, the real winners will be people who waited to buy.

I guess cash-buyers will do better than financed buyers - but both of them are going to do terribly if prices decline substantially.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#68

Post by sarchertech »

runnr_az wrote: post #35
ramesh31 wrote: post #17

Earlier quoted context omitted.

Someone is buying them, and it’s definitely not the average American. I have a 90th percentile income, and I cannot afford the median (or mean) home price in the US.

It's weird, right? Like... who is paying these crazy prices?

~6 months ago, someone with a 90th percentile income could very easily afford a median priced home with a monthly payment well below $2k a month.

The answer to who is paying these crazy prices now is fewer and fewer people.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#69

Post by gdubs »

time_to_smile wrote: post #24
czbond wrote: post #4

Earlier quoted context omitted.

Wait until they see 2026. 10-14% mortgage (my prediction)

For anyone relatively young seeing this range and thinking "ridiculous!", it's not. Growing up my parents rate was 12% and in the early 80s rates got up to over 17% [0]. It is very possible for the era of cheap money to end across the board. 0. https://www.freddiemac.com/pmms/pmms30

I recall my parents being very proud of securing a 7% rate in the 90s when they bought our first home. That said, it was a very very inexpensive house compared to today's prices.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#70

Post by dehrmann »

czbond wrote: post #4
no-dr-onboard wrote: post #2

I anticipate people misguidedly objecting to the 2008 comparison due to the traumatic baggage of that era.

Wait until they see 2026. 10-14% mortgage (my prediction)

That at least keeps up with current inflation. We'll see what inflation looks like in 2 years.
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